Prefix modifiers are not applicable to variables that have composite
values.

It should say:

Prefix modifiers are neither applicable to variables that have
composite values, nor to a value which is a list of values or an
associative array of (name, value) pairs.

Notes:

It is not specified, what "{list:1}" with list=["red","green","blue"] produces,
see discussion here https://github.com/uri-templates/uritemplate-test/pull/27
--VERIFIER NOTES--
The spec defines...

In Level 4 templates, a variable may have a composite value in the
form of a list of values or an associative array of (name, value)
pairs. Such value types are not directly indicated by the template
syntax, but they do have an impact on the expansion process
(Section 3.2.1).

...just three paragraphs above that sentence. Hence, a list is a composite
value and the quoted sentence below says that prefix modifiers are not
applicable to them.